The pandemic has hit Airbnb hard. The company lost 80% of its business in March 2020, raising questions about its viability. Just two months into the outbreak, the company laid off about 1,900 people, or a quarter of its workforce.
Fast forward to today, and Airbnb has not only weathered the crisis, but in June it made Fortune’s list of the top 500 largest U.S. public companies by revenue for the first time, completing its first-ever profitable year.
Transition is not easy. Airbnb must completely restructure itself. “We closed most of our divisions,” CEO Brian Chesky said on Wednesday’s episode. social radar podcast.
Regardless, he said, the move was something Airbnb needed to make — and he believes the same is true for many startups that have grown into larger organizations.
He explains that it’s tempting for startups to “departmentalize” in order to grow faster because decision-making can become a bottleneck at the top of the organization. But he added that while this might work initially, it could slow down the company’s growth in the long run.
He said the problem the pandemic has forced him to face is that “we have this culture where everyone can do anything. People can have their own projects.” There are too many departments or “fiefdoms,” such as focus, he said For sectors such as luxury goods, professional hosts, magazines, transportation, etc.
Airbnb, he said, follows a common Silicon Valley mindset. It goes like this: “Basically, you share the company’s values, you democratize data, you hire smart people, and you assume they will make the right decisions for the company.”
But, he added, “It’s all wrong. It sounds great and it’s right for some people, but it’s wrong for us.”
Chesky looked at how Steve Jobs transformed struggling Apple when he returned to the company he co-founded, noting that he “shut down most of the divisions and moved from a divisional structure to a functional structure.”
Chesky adopted a similar strategy, eliminating unnecessary departments at Airbnb. Some of the core content will remain, but from that point on, he said, “everyone will be working together to do everything. There will be no more swim lanes. There will be only a road map, and no one will ship anything unless it’s on the road map.” . Then I review everything about the company before shipping.”
He noted that he was not advocating for CEOs to become tyrants. “I don’t micromanage like an orchestra conductor to make sure it plays a cohesive sound,” he said.
Rather than giving employees “different swim lanes and different priorities,” the company’s top 30 employees “do everything together,” he explained. We don’t do anything that we can’t personally focus on. So if I couldn’t focus on it personally, we wouldn’t do it. This means that instead of pushing decisions down, I pull them in. “
Airbnb, he said, made the same mistakes that many growth companies make: “People raised too much money, hired too many people, they went in too many directions, they had too many projects, they had too much commitment to the team. It’s too much to ask for. ”
Chesky isn’t the only one who sees problems with the fiefdoms.
In May, former Slack CEO Stewart Butterfield addressed the tech industry’s over-hiring problem, which ultimately led to mass layoffs earlier this year. He describes a behavior by regulators that can quickly become problematic for well-funded startups with few financial constraints.
“You hire someone and the first thing that person wants to do is hire other people,” he told reporters. Odd shares May podcast. The reason, he explains, is that “the more people who report to you, the more authority you have and the more power you have in the organization.”
“It’s a very powerful incentive,” he added. “Every budget process is ‘I really want to hire,’ and to me that’s where all the excess comes from.”
Chesky made similar comments, noting that for executives, “the way to be successful is to increase headcount and gain resources — you know, territory.”
He suggested that founders can fall into the trap of pandering to these territories: “I think if I asked people what they wanted, they would say, ‘Less involved.'” Let’s move in more different directions. Give us more people. Give us more money. So everything I do is the opposite of those things. “
Leadership, he continued, is about presence, not absence: “Many leaders are absent because they think that’s what people want, because they call it ’empowerment.’ I put the word ’empowerment’ in quotation marks , because if you empower people in a large organization by letting them use their own devices, which sounds great when you’re an entrepreneur, then what you’re really doing is letting them run their own bureaucracy , politics. Like this game of Thrones. This is actually not fun. ”